Taxpayers are unlikely to ever recoup the £66bn spent saving Royal Bank of Scotland and Lloyds Banking Group from collapse, a committee of MPs has warned.
Margaret Hodge, chairman of the Commons Public Accounts Committee, said the sale of Northern Rock to Virgin Money earlier this year was a bad omen for the Government as it looked to wind down its holdings in both part-nationalised lenders.
Northern Rock was taken into state ownership almost five years ago following a run on the bank in 2007. The bank was eventually sold for £931m, leaving taxpayers nursing a £469m loss.
"There were only two bidders," Ms Hodge said. "The lack of competition does not fill us with confidence that the taxpayer will make a profit on the sale of the two banks which remain in public ownership. There is a risk that the £66bn invested in RBS and Lloyds may never be recovered."
The committee also criticised the role UK Financial Investments played in managing Northern Rock. The body, which controls taxpayers' stakes in banks, was meant to generate lending of £15bn from the lender but only managed £9.1bn before it was sold.
"It is vital that the final decisions on the wholly owned banks are made with value to the taxpayer taking precedence over speed of exit."Reuse content